When Pedro Sánchez called a snap election for 29 November, he was betting that Spain's headline economic figures would outweigh the daily frustrations of its citizens. The numbers are indeed impressive: GDP expanded by 2.8% in 2025 and is forecast to grow 2.4% in 2026, according to the European Commission's latest country report. Since the pandemic, Spain has outpaced the eurozone's largest economies, and employment is at its highest level since 2008.
Yet the campaign is unfolding against a backdrop of nationwide protests over housing, persistent inflation, and a growing sense that macroeconomic success has not translated into tangible improvements in living standards. The disconnect between aggregate growth and household reality is now the central fault line of Spanish politics.
Growth without productivity gains
The Commission attributes part of this paradox to a sharp rise in population, driven largely by immigration, but also to weak labour productivity. While hourly productivity has improved since 2019, output per employee and per full-time worker has remained essentially flat. That helps explain why per capita income has not kept pace with overall growth in a country Sánchez has governed since June 2018.
Immigration has become a key engine of the labour market. Employment grew by 2.6% in 2025, and jobs held by foreign-born workers accounted for 7.9% of all new posts created that year. But the labour market remains strongly seasonal. In August, unemployment rose by 44,419 to 2,355,918—the lowest August figure since 2007—and September saw a further increase of 23,587, also a low for that month since 2007.
The services sector, particularly tourism and service exports, has been the main pillar of growth. Spain welcomed 58.1 million international tourists between January and July 2026, a record and 4.6% more than the previous year. Tourist spending jumped 7.8% to €82.054 billion, according to the National Statistics Institute (INE). The Commission notes that service exports have widened the current account surplus and improved Spain's international investment position, but it also warns that a significant share of activity remains concentrated in low-productivity sectors such as agriculture. More than 82% of new jobs were created in low-productivity activities, limiting the scope for wage growth.
Inflation adds pressure
Inflation is another source of tension. In September, annual inflation stood at 5%, well above the eurozone average of 3.8% and among the highest in the bloc—only Lithuania (6.1%), Bulgaria (5.6%), Cyprus, Luxembourg (5.2%), and Greece (5.1%) recorded higher rates. The INE attributes the Spanish spike mainly to rising fuel prices and the cost of package holidays.
Housing, however, is the issue that most vividly illustrates the gap between economic growth and quality of life. Spain faces a severe mismatch between supply and demand, both for buying and renting, especially in large cities and tourist areas. The Commission's report notes that the severe rate of housing deprivation increased, indicating poor living conditions. Social housing accounts for barely 1.5% to 1.7% of the total stock, compared with an EU average of 6% to 7%. Prices have been rising steadily since 2014 and have accelerated in recent years, while high costs are also hampering labour mobility.
This is where economics and politics collided. After the government failed to ratify two decrees aimed at tackling the housing crisis—lacking support from its parliamentary partners—Sánchez dissolved parliament and called the election. The housing defeat was the immediate trigger, but the deeper issue is that growth alone has not solved the structural problems weighing on Spanish households.
The mass protests in Madrid and other cities have made housing the defining issue of the campaign. Sánchez's economic record is a double-edged sword: he can point to job creation and robust growth, but voters are more concerned about their ability to afford a home. The snap election could also shift the EU's political balance, adding a European dimension to the domestic contest.
As the campaign enters its final weeks, the question is whether Sánchez can convince voters that the macro numbers will eventually translate into micro improvements. His opponents argue that the growth model is flawed—too reliant on tourism and low-productivity services, and incapable of delivering the wage increases and affordable housing that Spaniards expect. The election will be a referendum on whether growth is enough, and the answer, for many, appears to be no.
